Oaktree Specialty Lending (OCSL) Q1 2026 earnings summary

Executive summary

• Adjusted net investment income for Q1 FY2026 was $36.1M ($0.41/share), with GAAP NII at $36.7M ($0.42/share), both up sequentially, fully covering the $0.40/share dividend declared for the quarter.

• Net asset value (NAV) per share decreased to $16.30 from $16.64, mainly due to unrealized depreciation, with Pluralsight as a significant detractor.

• New funded investments totaled $314M–$316.6M, with strong new investment activity and $178.5M–$179M in proceeds from prepayments and exits.

• Portfolio at fair value was $2.95B, with 86.4%–95.4% in senior secured debt and 9% in subordinated/unsecured debt.

• Non-accruals were stable at 3.1% of the debt portfolio at fair value, representing 6.5% at cost.

Financial highlights

• Adjusted total investment income was $74.5M–$75.1M, down from the prior quarter, mainly due to lower interest income and OID acceleration, partially offset by higher fee income.

• Net leverage ratio increased to 1.07x, with total debt outstanding at $1.6B–$1.62B; weighted average interest rate on debt was 6.1%.

• Liquidity stood at $576M, including $81M in cash and $495M undrawn on the credit facility.

• Distributions to stockholders totaled $35.2M ($0.40/share), fully covered by NII.

• Joint ventures held $511M in investments, generating 12% aggregate ROE, with leverage at 1.7x.

Outlook and guidance

• Management remains cautiously optimistic, expecting stable or widening spreads in private credit and improvement in middle-market M&A activity.

• Focus on maintaining target leverage, ample liquidity, and portfolio diversification amid evolving market conditions.

• Monitoring AI's impact on software and private credit, with expectations of uneven outcomes.